The Capital Markets Authority Rules

These Rules may be cited as the Capital Markets Authority Rules.

AI-assisted research synopsis — verify against the official legal text below.

Jurisdiction: Kenya
Instrument: Notice
Citation: Legal Notice 429 of 1992
Version: Undated source snapshot
Language: en

Source attribution: Source: Kenya Law

Statute overview

About this statute

These Rules may be cited as the Capital Markets Authority Rules. Sets conditions for approval, covering admission or non-admission of members and the required standards of competence and professionalism. Section 3: Books and records. Annual Report: Section changes in its rules and by-laws, if any. A securities exchange must make annual year-end account and transaction information available to the Authority and investors, including published accounts and transaction prices (high, low and mid-market).

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Provisions of The Capital Markets Authority Rules

Showing 28 of 28

Part I

PRELIMINARY

1
PRELIMINARY - 1. Citation

AI-assisted research summary: These Rules may be cited as the Capital Markets Authority Rules.

Section 1. Citation Section These Rules may be cited as the Capital Markets Authority Rules.

Part II

RULES RELATING TO SECURITIES EXCHANGE

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RULES RELATING TO SECURITIES EXCHANGE - 2. Conditions for approval

AI-assisted research summary: Sets conditions for approval, covering admission or non-admission of members and the required standards of competence and professionalism.

Section 2. Conditions for approval Section for the admission or non-admission of members, including the required standards of competence and professionalism;
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RULES RELATING TO SECURITIES EXCHANGE - 3. Books and records

AI-assisted research summary: Section 3: Books and records.

Section 3. Books and records Section its members;
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RULES RELATING TO SECURITIES EXCHANGE - 4. Annual Report

AI-assisted research summary: Annual Report: Section changes in its rules and by-laws, if any.

Section 4. Annual Report Section changes in its rules and by-laws, if any;
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RULES RELATING TO SECURITIES EXCHANGE - 5. Publication of accounts of listed companies

AI-assisted research summary: A securities exchange must make annual year-end account and transaction information available to the Authority and investors, including published accounts and transaction prices (high, low and mid-market).

Section 5. Publication of accounts of listed companies Section 5(1) A securities exchange shall, make available to the Authority and to the investors at the end of each year, details of the published accounts of companies that are listed on such securities exchange, and the details of securities transacted and the prices (i.e. high, low and mid-market), at which such securities have been transacted during the year. Section 5(2) Communication to investors shall be by way of publication in a daily newspaper published and circulated in Kenya.
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RULES RELATING TO SECURITIES EXCHANGE - 6. Periodic reports

AI-assisted research summary: Securities exchanges must provide the Authority with quarterly reports: (1) reports of all daily securities transfers (including private transactions with values and the parties' names); and (2) quarterly financial-standing reports for each member, broker and dealer within four weeks after each quarter, including margin account positions and net capital provisions as prescribed by the Authority.

Section 6. Periodic reports Section 6(1)(a) the official prices for the securities enlisted thereon; Section 6(1)(b) the number of shares delivered to the clearing facility; Section 6(1)(c) the number of securities listed and delisted during the preceding calendar quarters; Section 6(1)(d) a signed statement itemizing all outstanding positions beyond settlement date for each member; and Section 6(1)(e) any other matter that may be specified by the Authority. Section 6(2) A securities exchange shall furnish the Authority at least quarterly, with a report of all securities transfers for each day, including each private transaction which has been effected through its members, along with their values, and in the case of private transactions, the names of the transferor and the transferee. Section 6(3) A securities exchange shall furnish the Authority with quarterly report on the financial standing of each member, broker and dealer within four weeks of the close of each quarter and the report shall include the position of margin accounts and net capital provisions as prescribed by the Authority, with respect to each member.
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RULES RELATING TO SECURITIES EXCHANGE - 7. Other reports by exchange

AI-assisted research summary: Other reports by exchange

Section 7. Other reports by exchange Section there is a delay in opening the exchange;
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RULES RELATING TO SECURITIES EXCHANGE - 8. Publicity on transactions of securities

AI-assisted research summary: Securities exchanges must publish a daily list of transactions to the Authority and public media, and must publish a monthly report acceptable to the Authority with price movements and transaction magnitudes.

Section 8. Publicity on transactions of securities Section 8(1) A securities exchange shall issue to the Authority and the public media a daily list of transactions of securities made through its trading facilities, stating the security, the price and number of units transacted. Section 8(2) A securities exchange shall issue to the Authority and the public media, at least once a month and in a form acceptable to the Authority, a report on the securities transacted and price movements for each security including low, high and average prices and the magnitudes of transactions in the security.

Part III

LISTING RULES

9
LISTING RULES - 9. Securities exchange rules and guidelines to be approved

AI-assisted research summary: Securities exchanges must administer listing rules; the Authority must approve those rules before publication and may require exchanges to adopt rules.

Section 9. Securities exchange rules and guidelines to be approved Section 9(1) Every securities exchange shall administer rules and guidelines for the listing and maintenance of listing of securities and the rules and guidelines shall be approved by the Authority prior to their publication. Section 9(2) The Authority may, in consultation with a securities exchange, require the securities exchange to adopt any rule or guideline which it deems necessary. Section 9(3)(a) enabling the listing of securities by the securities exchange following application by an issuer to the securities exchange, through procedure acceptable to the Authority; Section 9(3)(b) enabling the delisting or suspension of securities by the securities exchange through procedure acceptable to the Authority; Section 9(3)(c) for ensuring that listed companies have a public share-holdings sufficient to make the companies responsive to public investors, in keeping with the development of the stock market; Section 9(3)(d) for ensuring that listed companies have as broad a base of public shareholders as possible in keeping with company capital size and the development of the stock market; Section 9(3)(e) for encouraging the listing of companies such that investors will have a range of investments conforming to the major business activities in the economy; Section 9(3)(f) for encouraging the listing of companies with large capital issues so as to improve the availability of shares; Section 9(3)(g) for encouraging the listing of companies with audited accounts showing a history of profits so as to improve the quality of the market; Section 9(3)(h) requiring the disclosure of all material information, including payments on substantial management contracts and substantial business contracts, to enable fair appraisal of an issue by investors; Section 9(3)(i) requiring prompt disclosure in a manner fair to all investors of material information of a price sensitive nature; Section 9(3)(j) facilitating the development of a second tier market with lower costs and less stringent requirements; Section 9(3)(k) for ensuring that all common equity issues are of fully paid-up shares of equal class carrying full voting rights; and Section 9(3)(l) for ensuring that all debenture issues are fully secured by charges on assets equal to at least one hundred per cent of the amount of issue and ranking pari passu in all respects with any other debentures.

Part IV

KEEPING OF BOOKS AND RECORDS BY BROKERS AND DEALERS

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KEEPING OF BOOKS AND RECORDS BY BROKERS AND DEALERS - 10. Books of account

AI-assisted research summary: The records shall include an itemized daily record of all purchases and sales of securities, all receipts and deliveries of securities (including certificate numbers), all receipts and disbursements of cash and all debits and credits; the records shall show the account for which each transaction was effected, the name and amount of securities, the unit and aggregate purchase or sale price (if any), the trade date, and the name or other designation of the person from whom purchased or received or to whom sold or delivered.

Section 10. Books of account Section journals (or other records of original entry) containing an itemized daily record of all purchases and sales of securities, all receipts and deliveries of securities (including certificate numbers), all receipts and disbursements of cash and all debits and credits; and the records shall show the account for which each such transaction was effected, the name and amount of securities the unit and aggregate purchase or sale price (if any) the trade date, and the name or other designation of the person from whom purchased or received or to whom sold or delivered;
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KEEPING OF BOOKS AND RECORDS BY BROKERS AND DEALERS - 11. Records to be maintained

AI-assisted research summary: Brokers and dealers must make and keep customer records containing specified personal, financial and recommendation-related information; maintain complaint files; record discretionary authorizations and supervisor approvals; and keep other records as directed by the Authority. If a customer declines to provide certain information after reasonable inquiry, that information must not be entered and a statement to that effect must be placed, but the customer's name and address must still be recorded.

Section 11. Records to be maintained Section 11(1)(a) the customer's name, date of birth or registration, address, nationality or citizenship, signature of the customer, the representative regularly handling the account and a designated supervisor; Section 11(1)(b) if the broker or dealer, or any of its representatives has made any recommendations to the customer to purchase, sell or exchange any security, the record of such customer shall also state the customer's occupation, marital status where applicable, investment objectives, other information concerning the customer's financial situation and needs which the broker or dealer or the representative considered in making the recommendation, and the signature of the broker or dealer or representative who made the recommendation to the customer. Section 11(2) If, after the effective date of these Rules a broker or dealer or any representative of such broker or dealer, has made any recommendation, to a person who became a customer prior to the effective date of these Rules, the broker or dealer shall make and keep current a record for such customer which shall contain the information required by paragraph (1). Section 11(3) Any item of information required by paragraph (1) shall not be entered in the customer's records if, after reasonable inquiry, the customer declines to furnish such items of information and a statement to that effect is placed in records; provided, however, that the customer's records s state the customer's name, and address. Section 11(4)(a) the customer's written authorization to exercise discretionary power or authority in his account; Section 11(4)(a)(i) the customer's written authorization to exercise discretionary power or authority in his account; Section 11(4)(a)(ii) the reason given by the customer for granting discretionary power or authority in his account; and Section 11(4)(a)(iii) the written approval of a designated supervisor of each transaction in such account indicating the exact time and date of such approval; Section 11(4)(b) a separate file for all complaints by customers and persons acting on behalf of customers; and the complaints shall be filed alphabetically by customer's name and shall include copies of all material relating to the complaint, and record of what action, if any, has been taken by the broker or dealer; and copies of such material and record of action taken shall be kept in the office through which the customer's account is handled; and Section 11(4)(c) such other records as the Authority shall direct.
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KEEPING OF BOOKS AND RECORDS BY BROKERS AND DEALERS - 12. Submission of annual accounts Deposit of customers funds

AI-assisted research summary: Every broker or dealer must submit audited annual accounts to the Authority and to their securities exchange within three months after the end of the broker's or dealer's financial year; the Authority may require other forms of financial statement.

Section 12. Submission of annual accounts Deposit of customers funds Section Every broker or dealer shall submit to the Authority and to the securities exchange of which the broker or dealer is a member audited annual accounts within three months following the closure of the broker's or dealer's financial year provided that the Authority may require such other form of financial statement as the Authority may specify.
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KEEPING OF BOOKS AND RECORDS BY BROKERS AND DEALERS - 13. Deposit of customers' funds

AI-assisted research summary: Requires deposit of customers' funds in one or more bank accounts which account shall contain only those funds;

Section 13. Deposit of customers' funds Section deposit customers' funds in one or more bank accounts which account shall contain only those funds;

Part IX

INVESTORS COMPENSATION FUND

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INVESTORS COMPENSATION FUND - 23. Meeting of Investor Compensation Committee

AI-assisted research summary: The chairman must convene Investor Compensation Committee meetings when the Fund's business requires it; the Authority must determine the procedure for those meetings.

Section 23. Meeting of Investor Compensation Committee Section The Investor Compensation Committee meetings shall be convened by the chairman whenever the business of the Fund so requires and the Authority shall determine the procedure for such meetings.
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INVESTORS COMPENSATION FUND - 24. Statement of accounts

AI-assisted research summary: The Investor Compensation Committee must keep proper accounts and prepare an annual statement of accounts; the statement must be audited by an auditor qualified under section 161 of the Companies Act (Cap. 486) and appointed by the Authority; the Authority must include Fund information in its annual report to the Cabinet Secretary.

Section 24. Statement of accounts Section 24(1) The Investor Compensation Committee shall keep proper accounts and records and in every financial year, prepare a statement of accounts showing the state of affairs, income and expenditure. Section 24(2) The accounts shall include premium paid and any contribution by any person and investments by the Investor Compensation Fund. Section 24(3) The statement of account shall be audited by an auditor who is qualified under section 161 of the Companies Act (Cap. 486) and appointed by the Authority. Section 24(4) The Authority shall include information relative to the Investor Compensation Fund in its annual report to the Cabinet Secretary.
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INVESTORS COMPENSATION FUND - 25. Compensation of investors

AI-assisted research summary: Rules for investor compensation: investors must apply to the Authority within six months after a final bankruptcy or liquidation order; the Investor Compensation Committee recommends allowance and amount; the Authority must notify investors in writing; net loss per investor capped at one hundred thousand shillings subject to possible increase by Cabinet Secretary; licensed persons and liquidators have repayment duties to the Authority.

Section 25. Compensation of investors Section 25(1)(a) from the bank guarantee furnished by such license person to the securities exchange of which such licensed person is a member; or Section 25(1)(b) from the compensation fund of the securities exchange of which such licensed person is a member; or Section 25(1)(c) in legal proceedings including bankruptcy or liquidation proceedings against such licensed person, Section 25(2) An application by any investor for compensation shall be made to the Authority within six months of obtaining a final order in bankruptcy or liquidation proceedings against such licensed person. Section 25(3) The Investor Compensation Committee shall, after examination of the evidence produced in support of a claim, make a recommendation to the Authority with respect to whether to allow or disallow such claim and, if the recommendation is to allow the claim, an assessment of the amount payable. Section 25(4) The Authority shall give notice of its decision to the investor in writing. Section 25(5) The net loss to an investor shall be subject to a maximum of one hundred thousand shillings provided that the Cabinet Secretary may, by order, on the recommendation of the Authority increase the sum specified in this paragraph to a sum specified in such order provided further that the net loss payable on all claims in any one year shall not exceed the total sum in the Investor Compensation Fund for the year in question. Section 25(6) Where the Authority has made, or is under a liability to make, a payment to an investor, on behalf of a licensed person, such licensed person shall be liable to the Authority for an amount equal to the payment made out of the Investor Compensation Fund. Section 25(7) In the case of an insolvent licensed person, the duty of a liquidator shall be to pay the Authority the amount paid by the Authority to all investors on behalf of the insolvent person under these Rules instead of to such investors and if the liability to any investor exceeds the amount paid by the Authority, the liquidator shall thereafter distribute any remaining proceeds.
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INVESTORS COMPENSATION FUND - 26. Power of Authority to require information

AI-assisted research summary: The Authority has the power to require information.

Section 26. Power of Authority to require information Section furnish to the Authority; or

Part V

FINANCIAL LIMITS FOR BROKERS AND DEALERS

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FINANCIAL LIMITS FOR BROKERS AND DEALERS - 14. Financial limits for brokers and dealers

AI-assisted research summary: Brokers and dealers must keep sufficient net capital and are prohibited from exceeding specified indebtedness, lending, deficit, exposure, and own-account securities limits.

Section 14. Financial limits for brokers and dealers Section 14(1)(a) aggregate indebtedness exceeds one thousand and two hundred per cent of the broker's or dealer's net capital; or Section 14(1)(b) net capital falls below one hundred thousand shillings for two consecutive months. Section 14(2)(a) grant unsecured advances or loans to any of its directors or associates in excess of twenty thousand shillings; nor Section 14(2)(b) allow deficits in the account of a single client to exceed thirty per cent of its monthly net capital; nor Section 14(2)(c) allow its exposure to a single listed security to exceed three hundred per cent of the broker's or dealer's monthly net capital; nor Section 14(2)(d) allow the book value of the listed securities it carries on its own account to exceed one hundred and fifty per cent of its monthly net capital.
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FINANCIAL LIMITS FOR BROKERS AND DEALERS - 15. Margin trading

AI-assisted research summary: Section 15 concerns margin trading and records an exception for securities approved for margin trading by the securities exchange of which the broker or dealer is a member, with the concurrence of the Authority.

Section 15. Margin trading Section except in the case of securities approved for margin trading by the securities exchange of which the broker or dealer is a member with the concurrence of the Authority; or
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FINANCIAL LIMITS FOR BROKERS AND DEALERS - 16. Interpretation

AI-assisted research summary: Section title: "Section 16. Interpretation Section deferred taxes;"

Section 16. Interpretation Section deferred taxes;

Part VI

INVESTMENT ADVISERS

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INVESTMENT ADVISERS - 17. Rules relating of investment advisers

AI-assisted research summary: Rules governing conduct of investment advisers, listing specific prohibited actions and duties relating to custody, recordkeeping, client notices, reporting and independent verification.

Section 17. Rules relating of investment advisers Section 17(1)(a) recommend to a client to whom investment supervisory management or consulting services are provided, the purchase, sale or exchange of any security without reasonable grounds to believe that the recommendation is suitable for the client on the basis of information furnished by the client after reasonable inquiry concerning the client's investment objectives, financial situation and needs, and any other information known or acquired by the investment adviser after reasonable examination of the client's financial records; Section 17(1)(b) place an order to purchase or sell a security for the account of a client without written authority to do so; Section 17(1)(c) place an order to purchase or sell a security for the account of a client upon instruction of a third party without first having obtained a written third-party authorization from the client; Section 17(1)(d) exercise any discretionary power in placing an order for the purchase or sale of securities for a client without obtaining written discretionary authority from the client within ten business days after the date of the first transaction placed pursuant to oral discretionary authority, unless the discretionary power relates solely to the price at which, or the time when an order involving a definite amount of a specified security shall be executed, or both; Section 17(1)(e) induce trading in a client's account that is excessive in size or frequency in view of the financial resources, investment objectives and character of the account; Section 17(1)(f) borrow money or securities from a client unless the client is a broker or dealer, an affiliate of the investment adviser, or a financial institution engaged in the business of loaning funds or securities; Section 17(1)(g) loan money to a client unless the investment adviser is a financial institution engaged in the business of loaning funds or the client is an affiliate of the investment adviser; Section 17(1)(h) misrepresent to any advisory client, or prospective advisory client, his qualifications or misrepresent the nature of the advisory services being offered or fees to be charged for such service, or omit to state a material fact necessary to make the statements made regarding qualifications, services or fees, in light of the circumstances under which they are made, not misleading; Section 17(1)(i) provide a report or recommendation to any advisory client prepared by someone other than the investment adviser without disclosing that fact; Section 17(1)(j) charges a client an unreasonable advisory fee in light of the fees charged by other investment advisers providing the same services; Section 17(1)(k) compensation arrangements connected with advisory services to clients which are in addition to compensation from such clients for such services; or Section 17(1)(k)(i) compensation arrangements connected with advisory services to clients which are in addition to compensation from such clients for such services; or Section 17(1)(k)(ii) charging a client an advisory fee for rendering advice when a commission for executing securities transactions pursuant to such advice will be received by the adviser or his employees; Section 17(1)(l) guarantee a client that a specific result will be achieved arising from the advice which will be rendered; Section 17(1)(m) publish, circulate or distribute any advertisement which does not comply with the Act or the Regulations or Rules made thereunder; Section 17(1)(n) disclose the identity, affairs, or investment of any client to any third party unless required by law, court order or a regulatory agency to do so, or unless consented by the client; Section 17(1)(o) enter into, extend or renew any investment advisory contract unless such contract is in writing and discloses, in substance, the services to be provided, the term of the contract, the advisory fee, the formula computing the fee, the amount of prepaid fee to returned in the event of contract termination or no performance, whether the contract grants discretionary power to the investment adviser and that no assignment of such contract shall be made by the investment adviser without the consent of the other party to the contract. Section 17(2)(a) notify the Authority that it has or may have custody of customer's securities; Section 17(2)(b) segregate the securities of each client, mark such securities to identify the particular client having the beneficial interest therein and hold the securities in safekeeping in some place reasonably free from risk of destruction or loss; Section 17(2)(c) deposit clients' funds in one or more bank account containing only clients' funds; Section 17(2)(d) maintain the account or accounts referred to in paragraph (c) in its name or in the name of the agent or trustees of such clients; Section 17(2)(e) maintain a separate record for each account, showing the name and address of the bank where the account is maintained, the dates and amounts of deposits and withdrawals and the exact amount of each client's beneficial interest in the account; Section 17(2)(f) notify the client in writing, immediately after accepting custody or possession of funds or securities, of the place and the manner in which the same will be maintained; Section 17(2)(g) send each client a detailed statement, at least once every three months, showing the funds and securities in the investment adviser's custody at the end of such period and all debits, credits and transactions in the client's account during such period; and Section 17(2)(h) have an independent certified public accountant verify all client funds and securities at least once every calendar year by actual examination at a time chosen by the accountant without prior notice to the investment adviser. Section 17(3) A certificate signed by such accountant stating that he has made an examination of such funds and securities under paragraph 2(h), and describing the nature and extent of the examination, shall be sent by the investment adviser to the Authority promptly after each examination.
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INVESTMENT ADVISERS - 18. Books and records to be kept by investment advisers

AI-assisted research summary: Investment advisers must keep the books and records described in Section 18.

Section 18. Books and records to be kept by investment advisers Section 18(1)(a) a journal or journals, including cash receipts and disbursements records, and any other records of original entry forming the basis of entries in any ledger; Section 18(1)(b) general and auxiliary ledgers (or other comparable records) reflecting asset, liability, reserve, capital, income and expense accounts; Section 18(1)(c) show the terms and conditions of the order, instruction, modification or cancellation; Section 18(1)(c)(i) show the terms and conditions of the order, instruction, modification or cancellation; Section 18(1)(c)(ii) identify the person connected with the investment adviser who recommended the transaction to the client and the person who placed such order; and Section 18(1)(c)(iii) show the account for which entered, the date of entry, and the bank, broker or dealer by or through whom executed where appropriate; Section 18(1)(c)(iv) show orders entered pursuant to the exercise of discretionary power; Section 18(1)(d) all cheque books, bank statements, cancelled cheques and cash reconciliations of the investment adviser; Section 18(1)(e) all bills or statements (or copies thereof), paid or unpaid, relating to the business of the investment adviser; Section 18(1)(f) all trial balances, financial statements, and internal audit working papers relating to the investment adviser's business; Section 18(1)(g) any recommendation made or proposed to be given; Section 18(1)(g)(i) any recommendation made or proposed to be given; Section 18(1)(g)(ii) any receipts, disbursement or delivery of funds or securities; and Section 18(1)(g)(iii) the placing or execution of any order to purchase or sell any security; provided, however, that if the investment adviser sends any notice, circular or other advertisement offering any report, analysis, publication or other investment advisory service to more than ten persons, the investment adviser shall not be required to keep a record of the names and addresses of the persons to whom it was sent; except that if such notice, circular or advertisement is distributed to persons named on any list, the investment adviser shall retain with a copy of such notice, circular or advertisement, a memorandum describing the list and the source thereof; Section 18(1)(h) a list or other record of all accounts in which the investment adviser is vested with any discretionary power with respect to the funds, securities or transactions of any client; Section 18(1)(i) all evidences of the granting of any discretionary authority by any client to the investment adviser, or copies thereof; Section 18(1)(j) all written agreements (or copies thereof) entered into by the investment adviser with any client or otherwise relating to the investment adviser's business; Section 18(1)(k) a copy of each notice, circular, advertisement, newspaper article, investment letter, bulletin or other communication recommending the purchase or sale of a specific security, which the investment adviser circulates or distributes, directly or indirectly, to ten or more persons, and if such notice, circular, advertisement, newspaper article, investment letter, bulletin or other communication does not state the reasons for such recommendation, a memorandum of the investment adviser indicating the reasons thereof; and all advertisements by the investment adviser and all records, worksheets, and calculations necessary to form the basis for performance data in such advertisements; Section 18(1)(l) a record of every transaction in a security in which the investment adviser or any of his representatives acquires any direct or indirect beneficial ownership; and the record shall state the title and amount of the security involved, the date, whether the transaction was a purchase or sale or other acquisition or disposition, the price at which it was effected, and the name of the broker or dealer with, or through whom the transaction was effected; and an investment adviser shall not be deemed to have violated the provisions of this paragraph for failing to record securities transactions of any investment adviser representative if he can show that he had adequate procedures and used reasonable diligence to obtain promptly reports of all transactions required to be recorded; and Section 18(1)(m) a copy of each written statement, the amendment or revision thereof, given or sent to any client or prospective client of such investment adviser and a record of the dates that the same was given or offered to be given. Section 18(2)(a) a journal or other record showing all Purchases, sales, receipts and deliveries of securities (including certificate numbers) and all other debits and credits to such accounts; Section 18(2)(b) a separate ledger account for each client showing all purchases, sales, receipts and deliveries of securities, the date and price of each such purchase and sale, and all debits and credits; Section 18(2)(c) copies of confirmations of all transactions effected by or for the account of any such client; and Section 18(2)(d) a record for each security in which the client has a position, showing the name of the client, the amount or interest of the client, and the location of such security. Section 18(3)(a) records showing the securities purchased, sold, date, amount and price of each security; and Section 18(3)(b) records for each security in which the client has a current position, records from which the investment adviser can promptly furnish the name of each client, and the current amount or interest and the name of the client.
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INVESTMENT ADVISERS - 19. Supervision of investment adviser's representatives

AI-assisted research summary: Investment adviser representatives must be supervised by a supervisor designated by the investment adviser, and the designated supervisor must review and approve openings, examine accounts, review transactions and correspondence, and approve complaint handling.

Section 19. Supervision of investment adviser's representatives Section 19(1) Every investment adviser's representative employed by an investment adviser shall be subject to the supervision of a supervisor designated by the investment adviser who may be the investment adviser in the case of a sole proprietor, or a partner, officer, office manager or any qualified investment adviser representative in the case of entities other than sole proprietorships. Section 19(2)(a) the review and written approval by the designated supervisor of the opening of each new client account; Section 19(2)(b) the frequent examination of all client accounts to detect and prevent irregularities or abuses; Section 19(2)(c) the prompt review and written approval by a designated supervisor of all advisory transactions by investment adviser representatives and of all correspondence pertaining to the solicitation or execution of advisory transactions by investment adviser representatives; and Section 19(2)(d) the prompt review and written approval of the handling of all client complaints. Section 19(3)(a) supervise and periodically review the activities of the supervisors; and Section 19(3)(b) periodically inspect each business office under his supervision to ensure that the written procedures are being enforced.

Part VII

PRIVATE TRANSACTIONS

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PRIVATE TRANSACTIONS - 20. Interpretation

AI-assisted research summary: Defines "close relation" to include a spouse, a parent, sibling, child, in‑laws, a grandchild, and a spouse of grandchild.

Section 20. Interpretation Section In these Rules, "close relation" means a spouse, a parent, sibling, child, in-laws, a grandchild, and a spouse of grandchild.
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PRIVATE TRANSACTIONS - 21. Prohibition on transfer of listed securities

AI-assisted research summary: Section 21 prohibits private transfers of listed securities but lists specific permitted private transactions and provides that when a private transaction is authorized no brokerage fee is payable though a nominal charge may be levied as determined by the securities exchange.

Section 21. Prohibition on transfer of listed securities Section 21(1)(a) a sale or gift to a close relation, charity or approved organization for a receipt of donations; Section 21(1)(b) the settlement of a will or estate of a deceased person; Section 21(1)(c) the operation of an employee share option scheme or employee share ownership scheme of a listed company with respect to its own shares, provided such a scheme has been approved by the Authority; Section 21(1)(d) restructuring or mergers or acquisitions in a scheme which has been accepted by the Authority; Section 21(1)(e) setting off the value of listed securities that are pledged against a loan from a commercial bank or other licensed lending institution, in settlement of such loan at the current established market value of such listed securities by mutual agreement between such lending institution and such borrower, and certified by the securities exchange as being a fair market price for such security; or Section 21(1)(f) any other private transaction of listed securities of an exceptional nature that the securities exchange and the Authority consider to be proper and acceptable. Section 21(2) Where a private transaction in a listed security is authorized no brokerage fee shall be payable for the transaction, but a nominal charge may be levied as may be determined by the securities exchange on which the security transferred through private transaction is listed.

Part VIII

PUBLIC COMMUNICATION

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PUBLIC COMMUNICATION - 22. Rules relating to public communication

AI-assisted research summary: Persons licensed under the Act and financial journalists must ensure advertisements, sales literature and other public communications are factual and aimed at assisting evaluation or promoting securities.

Section 22. Rules relating to public communication Section 22(1) All advertisements, sales literature and other communication with the public, by persons licensed under the Act and financial journalists shall be factual and any statements made shall be for the purpose of assisting in the evaluation of a particular security, type of securities, promoting the industry, service offered or the desirability of investing in securities in general. Section 22(2) No material fact or qualification may be omitted if such omission would cause the advertisement or sales literature to be misleading in the light of the context of other information presented. Section 22(3)(a) he makes a market in the securities recommended; and Section 22(3)(b) he or an associated person owns more than a nominal amount of such securities. Section 22(4) Any offer of a report, analysis or other service without any charge must be provided as such without any condition or obligation other than what is clearly described in the offer. Section 22(5) No claim with respect to research or analysis facilities or capacity may be made beyond those actually possessed by the person making the claim. Section 22(6) All statements made in advertising directed to the general public shall be supported by source of facts. Section 22(7)(a) a merger, acquisition or joint venture; Section 22(7)(b) a stock split or stock dividend; Section 22(7)(c) earnings and dividends of an unusual nature; Section 22(7)(d) the acquisition or loss of a significant contract; Section 22(7)(e) a significant new product or discovery; Section 22(7)(f) a change in control or a significant change in management; Section 22(7)(g) a call of securities for redemption; Section 22(7)(h) the public or private sale of a significant amount of additional securities; Section 22(7)(i) the purchase or sale of a significant asset; Section 22(7)(j) a significant labour dispute; Section 22(7)(k) a significant law suit against the company; Section 22(7)(l) establishment of a programme to make purchases of the company's own shares; Section 22(7)(m) a tender offer for another company's securities; or Section 22(7)(n) any other peculiar circumstances that may prevail with respect to, the company or the relevant industry.

Part X

SHAREHOLDERS COMPLAINT

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SHAREHOLDERS COMPLAINT - 27. Meeting of Shareholders Complaints Committee

AI-assisted research summary: The chairman must convene meetings of the Shareholders Complaints Committee at least once every three months or whenever its business requires; the Authority must prescribe meeting procedures.

Section 27. Meeting of Shareholders Complaints Committee Section The meeting of the Shareholders Complaints Committee shall be convened by the chairman at least once every three months or whenever its business so requires and the Authority shall prescribe the procedure for its meetings.
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SHAREHOLDERS COMPLAINT - 28. Power of Shareholders Complaints Committee

AI-assisted research summary: The Shareholders Complaints Committee must examine written complaints from shareholders of listed companies, review supporting documents and evidence, determine if violations occurred, must not make a final determination without giving the subject an opportunity to be heard, and must recommend to the Authority what action to take if a violation is found.

Section 28. Power of Shareholders Complaints Committee Section 28(1) The Shareholders Complaints Committee shall on receipt of a written complaint from any shareholder of a listed company, examine the documents and other evidence produced, if any, in support of such complaint, and determine whether the subject of the complaint has violated any provisions of the Act or any rule or regulation or any by-law, rule or regulations of the securities exchange; and no final determination of violation shall be made without affording the subject of the complaint an opportunity of being heard. Section 28(2) Where the Shareholders Complaints Committee determines that a person under the Authority's jurisdiction has violated any provision of the Act, any rule or regulation or any securities exchange by-law, rule or regulation, the Shareholders Complaints Committee shall recommend to the Authority the nature of action to be taken against such person.

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